In recent years, there has been a constant rise in entrepreneurship and self-run businesses. The restaurant industry always has a lot of exposure as a sustainable company, and it has attracted a lot of people who want to try their hand at it. Although the cost of starting and running a restaurant is very expensive, for many entrepreneurs, the attraction of operating a restaurant doesn’t fight the cost and risk related to an effort.
During the last decade, there was a steady increase in cloud kitchens that accept orders only by online ordering systems and provide no dine-in or takeout facility. The increasing growth of the food delivery business and the increasingly competitive marketplace that makes restaurant operations more expensive by the day may be the reason for this increase.
The cloud kitchen restaurant model has been against the traditional restaurant and reflects the increasing interruptions brought by technology in the field. The food delivery business has been important to the growth of the online ordering system and it also has been helpful to the cloud kitchen development. Restaurant owners will not look at online ordering and delivery as an additional part of their business in the future but as useful in staying relevant going forward. If you are looking to start cloud kitchen businesses, this is the correct time to do it. Before starting a cloud kitchen, you must know that there are both pros and cons to running a cloud kitchen business.
The pros of running a cloud kitchen business
Compared to the traditional restaurant business model, cloud kitchens have the following pros.
- On-demand labor: You can take advantage of on-demand work while saving staffing costs and avoiding compliance with labor laws, as a cloud kitchen owner.
- Scaling economy: Making larger orders for many delivery-only brands that run from the same kitchen will save you money on ingredients.
- Flexible Layout: To be profitable, ghost kitchens should prepare and pack orders quickly. Cloud kitchens make meal cooking and delivery effective and quick due to custom-build spaces and improved processes.
- Rich menu: The first preference of cloud kitchens is the speed of food cooking and handling. You can arrange prepared ingredients for various menus while running many restaurant brands from a single shared kitchen.
- Real-time adaptability: Cloud kitchens are designed with technology in mind. It means you can use analytics software for improving processes, ordering, and customer behavior. You can also modify the menu to satisfy the new demands of customers and increase the margin.
Cons of cloud kitchen business:
- Unqualified staff: The on-demand staff is not having sufficient training and take risk in food safety. To avoid this issue, you are investing in staff training and hiring full-time staff members. You must work mainly with permanent staff. When permanent workers need help at the time handling too many orders, you can hire an on-demand worker.
- Last-mile delivery: Initially, you have to pay additional fees for listing and delivery services. Secondly, you can not control the conditions in which couriers will deliver food, it threatening your reputation. You have to arrange your delivery services thereby you have all controls to solve this issue.
- Small delivery radius: An order- the standard is to deliver orders within 30 minutes. To meet this standard, your delivery radius should be 3-5 miles. Arrange a cloud kitchen in their neighborhood, to be near suitable customers.
- Local regulations: Health department officers may start attacking you with unpredicted requirements since cloud kitchens are less common than traditional restaurants. They can treat your business as a complete restaurant. Chefs who work in a cloud kitchen must have a license to produce and distribute food.
Select a correct tech stack for a cloud kitchen business :
Technology plays an important role in cloud kitchens, as many orders are made via a website, app, or delivery aggregators. This cloud kitchen will run without servers, menu, and even dine-in. So, a cloud kitchen directly depends on technologies that will accept online orders, handle online payments, show the order to kitchen staff, manage inventory, and collect and analyze your customer’s data.
POS: The main Requirement for a cloud kitchen is a Point OF Sale(POS) that receives orders from multiple channels, like delivery aggregators and online platforms. You can maintain records of orders from every platform and you can see which platform is best for you by having an integrated restaurant POS system.
It is important to access the sales data to develop the techniques that enhance your sales. Although you are connecting with online food aggregators is important, keep in mind that implementing your restaurant websites or mobile app for accepting orders is an extra sales channel.
KDS: In a faster cloud kitchen, when you want to deliver the order within 30 minutes, the order cooking time is generally 10-12 minutes. Order preparation time can be optimized using an integrated Kitchen Display System(KDS). As fast as the order is received, it gets updated in KDS. The kitchen staff can display the order details and the pickup time of the order instantly and can prepare the food order. This simplifies kitchen management, improves efficiency, and allows you to recognize any delays in the preparation process.
Inventory Management: Managing inventory effectively is crucial for any restaurant, and it is true for a cloud kitchen. A smart inventory management system allows you to track stock consumption and also stimulates you to order more stock when needed. It assists you to make less wastage and keep your food costs under control.
Technology is important for functioning smoothly in a cloud kitchen business and also improves the efficiency of operation. To ensure the operational efficiency and the smooth functioning of your cloud kitchen, you must have a detailed technology platform with flawless integration between POS, KDS, and inventory management.
Cloud kitchens are enhancing the restaurant industry. In the future, there will be even more delivery-only restaurants that gain more profit than those working with food aggregators who are paying high service fees and cutting down with smaller profits. Instead of a restaurant, we will connect the restaurant with a mobile application for ordering food in a few clicks, a cloud kitchen that cooks food and couriers will deliver the orders on time.